Abstract
This paper surveys recent research on the macroeconomic implications of demographic and technological changes. Lower fertility and increasing longevity have implications on the age population structure and, therefore, on the balance between savings and investment. Jointly with meagre productivity growth, this implies a low natural rate of interest that conditions the effectiveness of monetary and fiscal policies, especially in a world of high debt. New technological changes (robots, artificial intelligence, automation) may increase productivity growth but at the risk of having disruptive effects on employment and wages. The survey highlights the main mechanism by which demographic and technological changes, considered both individually and in conjunction, affect per capita growth and other macroeconomic variables.
Highlights
In most developed countries, the weight of the working-age population in total population is bound to decrease significantly in the forthcoming decades because of the retirement of the baby boomers, decreasing fertility during the recent past decades, and further increases in longevity
There is a new wave of technological changes, built upon the development of robotics and artificial intelligence (AI) that is generating some anxiety about the displacement of human labour with disruptive effects on employment and wages
Its main insight is characterising a macroeconomic regime under which low labour supply growth, population ageing, poor productivity growth, and high public debt leads to a savings glut, depressed investment, and, a very low natural interest rate and a permanent deficit of aggregate demand that may not be corrected by macropolicies
Summary
The weight of the working-age population in total population is bound to decrease significantly in the forthcoming decades because of the retirement of the baby boomers, decreasing fertility during the recent past decades, and further increases in longevity. There is a new wave of technological changes, built upon the development of robotics and artificial intelligence (AI) that is generating some anxiety about the displacement of human labour with disruptive effects on employment and wages Awareness of these trends has led to a revival of the secular stagnation hypothesis (Hansen 1939). This paper surveys recent literature on macroeconomics and labour economics and provides empirical evidence that have some bearing on these questions It highlights the main transmission mechanisms involved in the analysis of the macroeconomic implications of demographic and technological changes.
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